Diabetes device maker Embecta considers sale: Financial Times

Brief description of the dive:

• Embecta hired consultants because considering a potential saleAs reported by the Financial Times on Friday evening.
• The Parsippany, New Jersey-based company produces insulin syringes and pen needles used to treat diabetes. development of insulin pump for people with type 2 diabetes. This extracted from BD in 2022 and continues to work to transition away from its parent company’s systems.
• The Financial Times, citing two anonymous sources, reported that Embecta could be an attractive target for private equity because of its low market value and similarity to other companies that have attracted interest from buyers. An Embecta spokesman declined to comment on the report, saying: “Our policy is not to comment on market rumours or speculation.”

Diving Insight:

The Financial Times reported that Embecta has hired advisers from investment firm Centerview Partners to explore a potential sale, following “poor share price performance” following its spin-off from BD. The diabetes company currently has a market capitalization of $878.9 million as of Monday, and its shares fell by more than 60% since it first listed on the stock exchange.

“While we don’t know if the report is true, we are not surprised by this suggestion,” Marie Thibault, an analyst at BTIG, wrote in a research note on Monday.

Embecta sales growth was flat last year, and net income fell. The company said revenues of $1.12 billion in fiscal 2023, which ended in September. Its net income of $70.4 million was down 69% compared with fiscal 2022.

In January, Embecta said it had filed for a patch pump for people with type 2 diabetes. Food and Drug Administration Certification.

Embecta currently trades “significantly below its peers by every valuation metric,” Thibault wrote. She said that may be due to investor uncertainty about Embecta’s ability to compete in the patch pump market, a lack of sales growth and potential risks related to long-acting insulin and GLP-1. But the company also has positive aspects, “including a history of quarterly wins, relatively healthy operating margins (compared to many MedTech competitors), a market leadership position, a global presence, a dividend and a nearly complete separation process,” Thibault wrote.

A similar transaction is cited by the Financial Times: Baxter sells its injectable drug subsidiary last year to private equity firms Warburg Pincus and Advent International. The company, called Simtra Biopharma Solutions, was sold for $4.25 billion.